Chrysalis is latest target for Warner

WarnerR Music is turning its attentions towards the £180m music publishing arm of media group Chrysalis.

The Americans last week abandoned their long pursuit of EMI, Britain's last major independent music company, but Warner chairman Edgar Bronfman remains interested in making acquisitions.

Chrysalis, under chairman and founder Chris Wright, is in the process of selling its radio arm to Irish private equity firm Global Radio for £170m.

This deal should be completed formally by the end of September, leaving its music publishing business as its key remaining asset.

Chrysalis's music publishing sales are likely to be more than £37m, though profits are expected to be relatively low at about £3 million for the year to August.

Some of the company's key artists include Blondie, Jethro Tull and Billy Idol, while recent signings include songwriter Damon Albarn of Blur and Gorillaz, and Gossip, fronted by colourful lead singer Beth Ditto.

Music publishing is an attractive business because its revenue is based on licensing the right to use songs, so it provides a relatively stable source of income compared with recorded music, which depends on discovering new acts.

Chrysalis's music publishing division owns the rights to about 65,000 copyrights.

Investment bank Investec estimates that the business could fetch £180m, while noting that its present value reflected by its share price is about £90m.

The division suffers from relatively low profits because overheads to promote and administer international artists can be high for a small company, though a bigger owner would absorb such costs more effectively.

Warner last week decided not to bid against private equity firm Terra Firma for £3.2bn EMI, despite having expressed interest in the company for several years.

Though it remains interested in EMI's recorded music arm, should Terra Firma decide to sell it on, Warner could still acquire Chrysalis's recorded music business to add to its own operation without falling foul of competition rules.

The division is also likely to attract private equity interest. Crossroads Media, First State Media and Stage Three Music have all previously shown interest in music publishing firms.